You can't eliminate risk, only decide which ones to take

Risk functions like energy—it cannot be created or destroyed, only converted from one form to another, which means you're always choosing which risks to take rather than eliminating risk entirely.

• Risk does not equal return—it equals the possibility of more return
• Standard deviation and volatility metrics capture only one dimension of risk
• "Safe" investments like bonds or savings accounts still carry significant inflation and currency risks
• The 2022 market demonstrated how bonds and stocks can fall simultaneously when traditional risk relationships break down
• Warren Buffett manages risk through valuation and cash flow focus, not by avoiding risk altogether
• Financial planning is the most effective way to identify and manage different types of risk
• The worst kind of risk is the risk you don't know you have
• Wealth management requires ongoing monitoring since life circumstances and market conditions constantly change

Have questions about risk in your portfolio or want us to review your financial plan? Contact us at https://ducharmewealth.com/ for a consultation—we're always happy to help our listeners.

[00:00:00] Risk Is Like Energy: Can't Be Destroyed
[00:05:07] Quantifying the Unquantifiable: Risk Metrics
[00:10:14] Converting Risk: The Annuity Example
[00:15:36] Case Studies: Bitcoin, Bonds, and Stocks
[00:21:54] Risk Does Not Equal Return
[00:32:15] Managing Risk Through Financial Planning
[00:36:59] Wealth Management: Beyond the Initial Plan

DISCLAIMER:
Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy, and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Encompass More Asset Management LLC is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC) and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.